SAP Controlling

Goal of Controlling

- Managerial Accounting - also termed Controlling - is designed to collect transactional data that provides a foundation for preparing internal reports that support decision-making within the enterprise. - These reports are exclusively for use within the enterprise and include: cost center performance, profit center performance, and budgets analyses

Primary Cost Element

- Originate in the General Ledger within FI and are automatically transferred to CO when an FI transaction is recorded in the General Ledger

Statistical Key Figures

- Provide the foundation for accurate and effective cost allocations between cost objects - Utilized to support internal cost allocations involving allocations, assessments, and distributions - Examples: number of employees, square footage, minutes of computer usage

Operating Concern

- Represents a part of an organization for which the sales market is structured in a uniform manner - A operating profit for the individual market segments can be calculated. - Multiple controlling areas can be assigned to one operating concern.

Company Code

- Represents an independent legal accounting unit - Balanced set of books, as required by law, are prepared at this level. - A client may have more than one company code (United States, Germany, United Kingdom, Australia, etc.)

Cost Center

- Responsible for cost containment, not responsible for revenue generation - One or more value-added activities are performed within each cost center. - Unit that is distinguished, for example, by area of responsibility, location, or type of activity (copy center, security department, maintenance department)

Secondary Cost Element

- Used exclusively in CO for allocations and settlements between and amongst cost centers

Client

An independent environment in the system

SAP CO Module

Fully integrated with other SAP modules including, but not limited to: - Financial Accounting (FI) - Materials Management (MM) - Sales and Distribution (SD) - Production Planning and Execution (PP)

CO Master Data

profit center, cost center, internal order, revenue element, cost element, primary cost element, secondary cost element

Assessment

- A method of allocating both primary and secondary cost elements - Primary and/or secondary cost elements are grouped together and transferred to receiver cost centers through use of a secondary cost element. - Sender and receiver cost centers are fully documented in a unique Controlling (CO) document.

Cost Element

- A one-to-one linkage (mapping) between General Ledger expense accounts and CO cost elements is established to permit the transfer of FI expense information to CO. - Postings in FI that impact cost accounts lead to a posting in CO to a cost element. - In other words, expense account = cost element - just different words depending on whether FI object or CO object.

Revenue Element

- A one-to-one linkage (mapping) between General Ledger revenue accounts and CO revenue elements is established to permit the transfer of FI revenue information to CO. - Posting in FI that impact revenue accounts lead to a posting in CO to a revenue element. - In other words, revenue account = revenue element - just different words depending on whether FI object or CO object.

Controlling Area

- A self-contained, organizational unit for which the management of revenues and expenses can be performed - May include one or more company codes; therefore, an enterprise can perform management accounting analyses and reports across several companies - A way to identify and track where revenues and costs are incurred for evaluation purposes

Target Audience

- Executives - Senior Management - Department Managers - Controllers - Cost Accountants

Distribution

- Method for periodically allocating primary cost elements - Primary cost elements maintain their identities in both the sending and receiving objects - Sender and receiver cost centers are fully documented in a unique Controlling (CO) document.

CO Organizational Structure

- Represents the legal and/or organizational views of an enterprise - Forms a framework that supports the activities of a business in the manner desired by management - Permits the accurate and organized collection of business information - Supports the development and presentation of relevant information in order to enable and support business decisions - includes: client, company code, controlling area, and operating concern

Profit Center

- Responsible for revenue generation and cost containment - Evaluated on profit or return on investment - Enterprises are commonly divided into profit centers based on region, function, and product

Internal Order

- Temporary cost center responsible for cost containment, not responsible for revenue generation - It is used to plan, collect, and monitor the costs associated with a distinct short-term event, activity, or project (company picnic, trade show/fair, recruiting campaign)

Types of Allocation

Distribution and Assessment